Four Questions with Dan Brinker, American TonerServ
September 1, 2008 - page(s): 14-15
1) You’ve been quite visible lately, but tell us a little about the background of both the company and yourself. How has your background enabled you to move the company in the direction it has taken?
About five years ago, Tom Hakel, one of our directors and I saw an opportunity to bring efficiencies to the highly fragmented and rapidly changing printer supply and services industry. We validated our beliefs by talking to many, many people in the industry. We had a vision of being the leading consolidator in the Managed Print Services channel by building a strong team of people with our primary focus on customer service. We took the company public in early 2006 for the purpose of sharing equity with individuals in the companies we acquire. We then brought together a strong, experienced management team to execute on our strategy. We have built an operating company to help improve and grow the businesses that we acquire. We have established strategic relationships with several key vendors and set up systems and processes for best practices. Our goal is to find good companies and help them get better. As to my background, I am an entrepreneur and a CPA. I was President of American Home Shield, a public company, for 10 years. We helped build the Home Warranty Industry nationwide and grew American Home Shield’s revenue from $6.0 million to $125.0 million. Our focus was on great customer service, as it is today at ATS. I have been on both sides of many M&A transactions, so with my experience as a buyer and seller I can relate well to the business owners.
2) How many acquisitions and/or consolidations have been engineered by American TonerServ to date? Do you have any projections of what transactions are upcoming?
We have made five acquisitions to date and started a sixth company. As of today, we have four Letters of Intent (LOI) pending. When we close the four companies under LOI, American TonerServ will be a $30+ million growing business. Since the beginning of 2008, the activity has really picked up. Currently, we are in active discussions with more than a dozen other companies, representing more than $55 million in revenue. Our “Hub and Satellite” approach in Central Florida is in high gear. We acquired two companies there in 2007 and now have a growing business of approximately $10 million in revenue in the I-4 corridor. Our plans call for us to bring additional companies in the greater Tampa area into our Tonertype Hub.
3) How might you respond to critics who feel that ATS’s strategy of acquiring companies is detrimental to the industry?
Our team has been very active in the managed print services channel. We have yet to hear from any of the companies’ owners we have engaged that our “Strategic Consolidation” model is detrimental. Some owners have exit strategies that do not include selling their business, but all are interested. Some have not thought about exit strategies at all. Many times we will spend the time to help them understand the options available to them. The competitive pressures from the big box resellers, the OEMs, office equipment dealers, setting up separate managed print service companies and rising operational expenses make ATS a viable option for those owners who want to profitably grow their businesses, enjoy an immediate liquidity event and an opportunity for long term wealth.
4) Is the role played by American TonerServ necessary to today’s industry? Would that role have been as vital five years ago, and will it still be as critical five years from now?
You just have to look to the many industries that have already consolidated … the office supply channel, the office equipment dealer channel, the business forms/printing industry, muffler shops, the HAVC industry and many more. Each industry experiences a similar life cycle of embryonic growth, rapid growth, maturation and consolidation. Consolidation has been occurring in the remanufacturing sector for some time. Now there is a huge opportunity to bring more efficiency to the resellers whether it is buying power, marketing support, access to nationwide services, print management programs, CRM solutions and much more. We are finding most all of the 300+ companies that we have talked to are dealing with the same business issues. I believe the timing is perfect for us and that the window for effective, successful consolidation is three to five years. Three important factors that will make us successful are 1) we have a strong, seasoned team with successful consolidation experience and industry knowledge; 2) we are acquiring companies whose owners are engaged in their businesses, want to be part of ATS and believe in our vision and; 3) we are a publically held company and are solely focused on our core business of strategic consolidation.
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